The ongoing conflict in the Middle East is causing significant disruptions to global supply chains for plastics and lubricants, with experts warning of long-term economic and industrial impacts. The Strait of Hormuz, a critical transit point for 20% of the world’s crude oil, has seen prolonged shipping delays due to the war, directly affecting the production and sale of plastic products and base oils.
Recycled plastics are experiencing a surge in demand as the cost of virgin plastic skyrockets. Typically more expensive, recycled plastic has become more competitive in recent months due to the rising prices of ethylene and polyethylene, which are derived from oil and gas. The International Energy Agency has described the situation as "the biggest energy security threat in history," extending beyond crude oil to include fertilizers, helium, and base oils.
Base oil prices have reached record highs, particularly in Europe, where Group III base oil prices have climbed nearly 100% since the start of the Iran war. These oils are essential for producing high-performance lubricants used in luxury vehicles and industrial applications. The Gulf region, which accounts for 20% of global Group III base oil capacity, has been particularly affected by shipping disruptions and damage to key facilities, including Shell’s Pearl Gas-To-Liquid plant in Qatar.
Manufacturers like Dow Chemical have announced significant price increases for plastic resins, with some hikes reaching 30-40%. The war has also led to declarations of "force majeure" by producers in Bahrain and the United Arab Emirates, further complicating supply chains. Meanwhile, scientists continue to study the environmental impact of microplastics, which are now being found in research laboratories, raising questions about contamination.
The long-term implications of these disruptions remain uncertain, but analysts suggest that the war could accelerate the adoption of recycled plastics and alternative materials. However, the immediate challenges for industries reliant on these materials are substantial, with potential shortages looming if the conflict persists.